Similar to the 30-year fixed mortgage, the 20-year fixed rate mortgage has a fixed interest rate and monthly payments that never change. This is constant over the entire 20 year term of the loan. A 20-year fixed rate loan may be a good mortgage option if you plan on staying in your home for a long duration and do not intend on moving down the line, yet want to pay the mortgage down faster than a 30 year term. This allows you to save money on less interest paid on the mortgage through a higher payment, which ultimately means shaving 10 years of payments (and interest) when compared to a 30-year fixed mortgage.
The 20-year fixed rate mortgage is primarily for people who can handle a higher monthly payment than a 30-year fixed mortgage while, who want to pay less in interest over the term of the loan, and also want an interest rate that does not change over the entire term of the loan.
Your payments will always be the same. You will pay the mortgage off in 20 years, assuming you pay only pay the fixed mortgage payments each month. Due to the way an amortization schedule works, you’ll pay less interest over the life of the loan compared to a 30-year fixed loan or a 20-year fixed. Payments will be higher but the long-term gain on home ownership and less interest paid will be sizable.
Similar to a 30-year fixed, since your interest rate is locked for the entire term of your loan, your payments will never change. This stability in the payment is what appeals to many homeowners, along with a slightly higher payment that will shave substantial interest paid over the term of the loan. Similarly, if your taxes and insurance payments go up, then naturally your overall monthly payment will also go up.
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